Western lawyers typically view IP rights as impossible to value monetarily, and so they craft their IP protection agreements with a focus on injunctive relief. This makes sense in countries like the United States and Canada, where judges have ample power to issue and enforce injunctions. This does not make sense for China.

Though Chinese judges are empowered to issue injunctive orders, they typically lack the power to ensure implementation. This causes them to avoid issuing injunctions they know will be ignored and to instead favor asset seizure orders. So in drafting a China IP agreement, the goal should be to provide for a specific monetary remedy for virtually every act of infringement or other violation of the terms of the contract and to avoid creating a situation where injunctive relief is required.

China NNN Agreements Help Keep Your IP Private

A well-crafted contract damage provision makes it easy for Chinese courts to issue asset seizure orders and decisions on damages. This is an effective solution for protecting IP from China that accounts for the realities of Chinese law and China’s court system. Perhaps most importantly, Chinese companies and their lawyers know these provisions will work and so just having one is an effective way to stop your Chinese counter-party from breaching your NNN Agreement by stealing your IP.

Chinese companies fear prejudgment seizure of their assets and they know that if they breach a well drafted China-centered NNN Agreement, a Chinese court will likely freeze their assets. This fear means that Chinese companies tend to abide by the NNN agreements they sign. Not always of course, but when a Chinese company does violate an agreement, referring to the NNN agreement and coupling that with a threat of litigation will usually be enough to induce the Chinese company to step back into line. A China-focused NNN Agreement will usually create sufficient fear of litigation to reduce the likelihood of having to go to court.

Dan Harris is a founding member of Harris Bricken, an international law firm with lawyers in Seattle, Portland, San Francisco, Barcelona, and Beijing. He is also a co-editor of the China Law Blog.